On September 6, 2023, Vice President Cevdet Yılmaz unveiled the medium-term program, a three-year economic plan spanning from 2024 to 2026.(6) This program encompasses projections for both the Turkish and global economies, along with macroeconomic objectives. Regrettably, the program document itself is available only in Turkish and can be accessed in the provided footnote file for more details.
There are two notable points worth emphasizing regarding the influence of democratic institutions on the economy. Firstly, it's worth noting that this program was not officially announced by the Ministry of Treasury and Finance, even though it was stated to have been prepared by the ministry. Instead, it is exclusively accessible on the website of the Strategy and Budget Directorate of the Republic of Turkey. Furthermore, it is Vice President Cevdet Yılmaz, not the Minister of Treasury and Finance Mehmet Şimşek, who presented the program. This situation underscores the role of the Presidency of Strategy and Budget as a coordinating body and highlights that ministries have taken a backseat compared to the presidencies and boards under the Presidency.
This further reinforces the notion that ministries, while remaining important entities, have less influence when it comes to setting the strategic direction within the government and primarily operate in an executive capacity. Unfortunately, this may diminish the perceived institutional power of the Ministry, which may not accurately reflect its actual authority and capabilities.
Secondly, it's crucial to reflect on a significant issue that Turkey has experienced previously, shedding light on how institutional capacities and foresight may be diminishing. Turkey had announced three-year economic programs for the years 2022-2024(7) on September 5, 2021, and for 2023-2025(8) on September 4, 2022. In other words, new three-year programs were consecutively introduced in 2021, 2022, and 2023. This means that under the leadership of President Recep Tayyip Erdoğan, there are now three different economic programs for 2024, all of which are in contradiction with each other.
This situation raises concerns about the consistency and coherence of economic planning, as well as the ability of institutions to provide reliable and sustainable economic strategies.
Indeed, economic predictability plays a paramount role in Turkey's development. The country faces challenges related to a scarcity of domestic capital, given its savings deficit. Consequently, foreign funding becomes crucial for Turkey's economic growth and stability. Attracting foreign resources and investments hinges upon the establishment of a predictable economic and legal framework.
However, the current situation seems to increase the risk for foreign investors who want to make long-term investments in Turkey. We hope that from now on Turkey will have an economic bureaucracy that does not have to announce three-year economic programs every year. This will also save Turkey from the high interest rates and political concessions it pays to obtain foreign funding. Such a major institutional transformation seems quite difficult in a short time. But in this system of governance, where common sense does not work, there is no other option but to hope.